WASHINGTON, March 12, 2013 /PRNewswire-USNewswire/ -- A new study by former
FCC commissioner Dr. Harold Furchtgott-Roth and the Analysis Group asserts
that the price Sprint has offered for Clearwire Corporation significantly
understates the true value of Clearwire's technology opportunities and wireless
spectrum holdings. The study supports Crest's contention that the public would
be best served if Clearwire remained free to offer its spectrum to multiple
The study was submitted to the Federal Communications Commission today by Crest
Financial Limited, a major minority shareholder in Clearwire, in connection with
the FCC's review of Sprint's proposed acquisition of Clearwire.
According to the Furchtgott-Roth Report, Sprint's $2.97 per share offer for
Clearwire represents a value of just $0.11 per MHz pop for Clearwire's
spectrum and significantly understates the current value of Clearwire's unique
spectrum holdings. The Report says that applying reasonable assumptions to the
multi-customer business plan presented by two firms advising the Clearwire board
results in a valuation between $9.54 and $15.50 per share. These share price
values correspond to spectrum prices between $0.31 and $0.50 per MHz pop.
The Sprint offer also fails to account for Clearwire's unique ability to deploy
wireless technology that offers far greater future value than the technology
currently offered by most major U.S. carriers, the study says. In his report,
Dr. Furchtgott-Roth explains that TDD-LTE technology allows for higher download
speeds and efficient spectrum utilization. He also notes that "the only band of
spectrum in the United States that can be developed for TDD-LTE services is
the 2.5 GHz band largely controlled by Clearwire." (continued)
The Report, which was commissioned by Crest, explains that Sprint's offer
ignores both the value ascribed to similar spectrum in recent transactions and
the fact that Clearwire's spectrum holdings, together with its technology
offerings, are well-suited for use by multiple carriers. "The fragmented
spectrum holdings of other U.S. carriers create an opportunity for Clearwire to
offer a valuable wholesale service," the report states. The Report supports
Crest's argument made in filings with the FCC that Sprint's acquisition of
Clearwire would harm not only Clearwire shareholders but also the public at
Furthermore, the Report says that for unexplained reasons Clearwire abandoned
the lucrative multi-customer strategy in favor of the Sprint acquisition. The
Report supports Crest's position that the public would be best served if
Clearwire could offer its spectrum to multiple customers, thereby allowing more
wireless carriers to pursue new technologies and mount challenges to the
wireless market's current duopoly.
Dr. Furchtgott-Roth was an FCC commissioner from 1997 through 2001. Before that,
he was chief economist for the House Committee on Commerce and a principal staff
member on the Telecommunications Act of 1996.
The Furchtgott-Roth study echoes a separate study, also done for Crest, by
Information Age Economics (IAE), which says that the true value of the wireless
spectrum owned by Clearwire is two or three times higher than the value
reflected in the price Sprint has offered to pay to acquire Clearwire.
Good post, however my take on this report is simple. Anyone can place a value on the spectrum, but unless you have a buyer willing to pay what you feel it's worth, your really just holding onto paper until someone comes along with a offer. I hope I'm way off base here 'cause I'd like to see a higher offering too. Time will tell...